Polish Power Exchange and European markets - trading ...€¦ · 11 Year 2013 – the best year...
Transcript of Polish Power Exchange and European markets - trading ...€¦ · 11 Year 2013 – the best year...
Polish Power Exchange and European markets - trading volumes and position July 2014
Agenda
• Polish Power Exchange (POLPX) – Who We Are
• POLPX – Who We Are
• Breakdown of the WSE Group revenues in 2013
• Annual sales revenue of POLPX
• POLPX Group – three business areas
• POLPX members
• POLPX implements its strategy in favorable environment
• POLPX an important player on the energy market
• Year 2013 – the best year ever for POLPX
• Polish Power Exchange and European Markets
• Poland is one of the biggest energy markets in the EU
• One of the key success factors is diversity of POLPX offers
• Investment behaviour is similar on power exchanges in the region
• Today Poland is a liquid energy market
• Areas of POLPX's activity Commodity Market • Areas of POLPX's activity Financial market
• Legal procedure – time schedule
• FIM development prospects
POLPX – Who We Are
4
POLPX – Who We Are POLPX was founded at the end of 1999, on the initiative of the Minister of State Treasury,
as the crucial component of electricity market liberalisation in Poland.
• The only licensed power exchange in Poland – under the supervision of the Polish Financial Supervision Authority
• Since February 2012 POLPX has been a subsidiary of the Warsaw Stock Exchange
• Fastest-growing commodity exchange in the region – an active member of:
o EUROPEX (organisation uniting electricity exchanges based in Europe, including commodity and financial markets)
o APEx (Association of Power Exchanges – a global organisation )
o AFM (Association of Futures Markets)
• POLPX operates markets for electricity, natural gas and property rights
• POLPX and international markets – market coupling with Sweden has been in place since December 2010. Efforts are underway to join the NWE market as part of the Price Coupling of Regions initiative
Breakdown of the WSE Group revenues in 2013
• Record-breaking revenues of the WSE Group - PLN 283.8 million • Growth by PLN 9.9 million (+3.6%) against the 2012 level – driven by
growing revenues from the commodity market – PLN 76 million (+21.3% YoY)
• Revenues from the commodity market account for 26.8% of the overall the WSE Group revenue
commodity market
financial market
other
26.8%
72.3%
Annual sales revenue TGE S.A. (PLN mn)
11 21
29 35 38
51 53.4
0
10
20
30
40
50
60
2007 2008 2009 2010 2011 2012 2013P
1
1 POLPX separate revenue (without Warsaw Commodity Clearing House data)
POLPX Group – three business areas
• non-energy commodity market, e.g. agrifood market
• market for power and gas, derivatives and related products
• futures contracts based on commodity price changes
• market in the making
POLPX members
• Currently, 59 entities have the status of a POLPX member, including:
PGE Polska Grupa Energetyczna S.A., PGNiG S.A., GAZ-SYSTEM S.A., TAURON Polska Energia S.A., ENEA S.A., ENERGA Obrót S.A., PKP Energetyka S.A., RWE Polska S.A., EDF Polska S.A., Vattenfall Energy Trading Sp. z o.o., Zespół Elektrowni PAK S.A., Noble Securities S.A., CEZ Towarowy Dom Maklerski Sp. z o.o., PGE Dom Maklerski S.A.
• In total, 31 entities are actively operating on the gas market, either directly or through brokerage houses. 8 companies are admitted to transact directly.
• Certificate of Origin Register – currently 2003 entities are
members of the COR
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POLPX implements its strategy in favorable environment
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POLPX an important player on the energy market
POLPX has operated for 15 years The last 4 years were a period of rapid growth
Sources: POLPX, URE
Legislation and appropriate product offers have resulted in doubling energy volume at POLPX
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Year 2013 – the best year ever for POLPX
• Record-breaking volume level in the electricity markets in 2013 – over 176.5 TWh, an increase of 33.76% from 2012 (132 TWh)
• The combined volume of trade at POLPX in 2013 corresponds roughly to 108.64% of Poland's power generation for the year and 111.75% of its total consumption.
Electricity generation in Poland in 2013 according to PSE (TSO) figures – 162,501 GWh, total consumption - 157,980 GWh.
• The volume of electricity scheduled by POLPX for the following day from the CFIM, DAM and IDM markets amounts to approx. 82 TWh, which means that in 2013 deliveries contracted through the Exchange physically accounted for approx. 65% of the domestic wholesale market volume and approx. 52 % of the domestic demand for electricity
• A 35% increase on the volumes scheduled in 2012 (approx. 61 TWh) was observed.
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POLPX and European markets
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Poland is one of the biggest energy markets in the EU
Among the top electricity consumers in the EU
The Polish market has grown at the fastest pace CAGR – Compound Annual Growth Rate of energy consumption
in the EU in 2007-2012
And the top natural gas consumers 600 400 200 0
France 434.1 Germany 525.8
Other EU countries 463.5 Finland 80.8
Belgium 83.0 Netherlands 106.5
Poland 122.6 Sweden 127.3
Spain 240.2 Italy 296.7
UK 317.6
9.713.5
16.616.9
31.436.4
42.568.7
75.278.3
0 20 40 60 80
Hungary Romania
Poland Belgium
Spain Netherlands
France Italy
Germany UK
Energy consumption in 2012 (TWh)
Natural gas consumption in 2012 (bcm)
-2 -1 0 1 2
0.4% Germany -0.1%
Other EU countries -0.4% Finland -1.3%
Belgium 0.0% Netherlands -0.4%
Poland 1.4% Sweden -0.6%
Spain -0.9% Italy -0.8%
UK -1.5% France
%
-4 -2 0 2 4
Spain Belgium 0.4% Poland 3.8%
Hungary -3.9% Romania -3.5%
-2.2% Netherlands -0.3%
France 0.0% Italy -2.5%
Germany -1.9% UK -3.0%
Sources: BP Statistical Review, Eurostat, ProPB analysis
CAGR of gas consumption in the EU in 2007-2012
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One of the key success factors is diversity of POLPX offers
Sources: power exchanges
POLPX product offers resembles those of top power exchanges in the EU. It includes spot and forwards products for power and gas
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Investment behaviour is similar on power exchanges in the region
1 As compared to total purchases of yearly BASE 2014 power contracts Sources: Reuters, power exchanges
Volume of yearly BASE power contracts1 Similar price trends at neighbouring exchanges
Volume of yearly BASE contracts compared to BASE 2014
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Today Poland is a liquid energy market
1Traded volumes are compared to final energy consumption of electricity in 2012 Sources: power exchanges, Eurostat
Liquidity of NWE markets is higher than in CEE
but derivatives market at POLPX is similar to EEX
Traded volumes in Poland make the market liquid
15,617,619,3
49,7
92,2
18,218,7
27,8
50,5
87,5
0
20
40
60
80
100
%
+16,8% +6,0%
+44,4%
+1,6%
-5,1%
PO
LP
X
OT
E
HU
PX
EP
EX
Nord
Pool
2013 2012
20,428,9
89,392,1
387,1
31,541,0
125,3125,9
370,6
0
100
200
300
400
NA
SD
AQ
OM
X
%
+36,7%
+54,7%
+42,1%
+40,3%
-4,3%
HU
PX
/PX
E
PX
E
EE
X
PO
LP
X
39,746,5
107,7
138,9
479,3
59,459,7
144,0
175,7
458,1
0
100
200
300
400
500
+28,4%
+26,5%
+33,8%
-4,4%
HU
PX
/PX
E
PX
E/O
TE
PO
LP
X
EP
EX
/EE
X
Nord
Pool,
NA
SD
AQ
OM
X
%
+49,7%
Liquidity ratio on spot markets1 Liquidity ratio on derivates market1 Liquidity ratio of all traded volumes1
Power exchanges in Europe
Areas of POLPX's activity Commodity Market
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Key areas of POLPX activity – commodity market
• Trade in exchange commodities on the following markets:
- DAM&IDM - Day-Ahead and Intraday Market for electricity
- DAMg – Day-Ahead Market for natural gas
- CFIM –Commodity Forward Instruments Market with Physical Delivery – for
electricity and gas forward instruments
- PRM – Property Rights Market – for property rights referred to in Article 2 section
2 points d) and f) of the Act on Commodity Exchanges
- EAM – Emission Allowance Market for emission allowances
• Keeping the Certificate of Origin Register
including the property rights arising from the certificates of origin, according to the
principles set forth in the Energy Law Act, the Energy Efficiency Act and in the Rules
for the Certificate of Origin Register maintained by the Polish Power Exchange.
Day Ahead Market and Intraday Market (DAM&IDM) for electricity – volume of trade and Average Weighted Price between 2012-2014
162.53
168.4 169.66
196.77
170.15
130.00
150.00
170.00
190.00
210.00
230.00
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
Styczeń Luty Marzec Kwiecień Maj Czerwiec Lipiec Sierpień Wrzesień Październik Listopad Grudzień
2012 2013 2014
Cena średnioważona wolumenem w 2012 Cena średnioważona wolumenem w 2013 Cena średnioważona wolumenem w 2014
Commodity Forward Instruments Market with Physical Delivery (CFIM) for electricity between 2012-2014 Monthly volume-weighted average transaction price (MWh) for BASE_Y-14 in 2013 and BASE_Y-15 in 2014
167,15
163,53
161,75 158,66
150,64 148,5
146,89 148,71
156,35
153,78
151,31 152,71
158,04
164,52 164,86 165,29 165,07
135
140
145
150
155
160
165
170
0
5 000 000
10 000 000
15 000 000
20 000 000
25 000 000
30 000 000
January February March April May June July August September October November December
2012 2013
2014 Monthly weighted average price for BASE_Y-14 in 2013
Monthly weighted average price for BASE_Y-15 in 2014
POLPX gas market in 2013/2014 Volumes (MWh) and prices (PLN/MWh)
Areas of POLPX's activity Financial market
Financial market
In 2015, POLPX plans to launch a financial market and offer futures contracts for electricity price index (financial contracts settled in cash). • Futures contracts as a tool for electricity price hedging • Futures are an easier and more flexible instrument to manage – market participants
want to hedge the purchase price in the first place, without a commitment as to the volume position
Motivation for transacting in the market: • Hedging, arbitrage and speculation • Plans to introduce new gas-based contracts and other commodity products in the
future: Motivation for launching the financial market: • Respond to the expectations of POLPX members, investors, customers and financial
institutions • Strengthen the position of POLPX in the region, a natural complement to the current
product offering the POLPX's Commodity Forward Instruments Market is the second largest market in Europe
• Attract new players from the finance industry, investors – Members of the Financial Instruments Market (FIM): investment companies (brokerage houses/banks – domestic and foreign) and energy companies
Legal procedure – time schedule
1. On 17 March 2014, POLPX submitted an application to the Ministry of Finance to
obtain a permit to operate an exchange within the meaning of the Act of 29 July 2005 on Trading in Financial Instruments
2. Currently, the Polish Financial Supervision Authority (PFSA) is carrying out administrative proceedings concerning the above-mentioned application (extended until 20 July)
3. Decision of the Minister of Finance 4. Consultations with market participants (contracts/principles, quotations/market
makers recruitment) 5. Definition of the contract standard (resolution of the POLPX Management board) and
drafting of the Trading Terms 6. Application to PFSA for approval of the Trading Terms 7. PFSA decision 8. Launch of trading – 1st step of the implementation of a new trading system at POLPX Final date of market launch depends on:
Granting of necessary licence by the MoF Approval of the Trading Terms
Implementation of 1st part of the new trading system
FIM development prospects
The majority of the Scandinavian market participants confirm (according to a survey carried out by regulators from the Nordic countries) that attractive options for hedging the future price on the financial market encourage them to increase the spot market volumes instead of taking long-term volume positions.
The market for electricity-based financial instruments trades 4 to 6 times the consumption volume in the Nordic countries.
In Scandinavian countries, the spot market accounts, on average, for 70% of the electricity consumption in this area.
FIM development prospects, continued • As a next step, the trading in the following instruments will be launched:
gas futures
green certificate futures
• POLPX will present the financial market implementation plans after their acceptance by the PFSA and consultations with market participants.
POLPX / Towarowa Giełda Energii S.A. [email protected] +48 885 885 645 +48 607 030 573 WSE Investor Relations +48 22 537 72 50 [email protected]